Westfield-owner Scentre Group has reached rental agreements with 89 per cent of its retailers as it looks forward to the holiday season.
The agreements come under the Covid-induced commercial tenancies code of conduct where “good faith” leasing principles are imposed between tenants and landlords on a proportionate basis.
The group has undergone 1,395 lease deals for renewals or new leases, representing approximately 167,000sq m of gross lettable area
The retail sector has been hit hard by the pandemic which saw sharp falls in the June quarter however volumes increased by 6.5 per cent according to the Australian Bureau of Statistics.
Meanwhile online sales made up 10.6 per cent of total retail sales in the September ABS results.
Despite all this, gross rent cash collections for Scentre are surpassing January volumes as the group now has 98.4 per cent occupancy on its portfolio bringing in $203 million for October.
Gross rent cash collections
^Source: Scentre Group Operational Update
Customer visits are also up to 90 per cent compared to last year across its stores with the exception of Victoria.
Sales growth in specialty stores is down 1.9 per cent for the quarter while major store are up 1 per cent, excluding Victoria’s results where stores were in lockdown.
Moody’s Investors Service vice president Matthew Moore said Scentre operational update is credit positive, it shows improving cash rent collections, with most stores now open and trading.
“Cash rent collection rates have steadily improved since the trough in April, registering around 85 per cent for the September quarter and 96 per cent for October, a level that compares favourably to pre-pandemic rates,” Moore said.
“While there is still considerable uncertainty around the operating environment for discretionary-exposed retail REITs, the current trends for Scentre, if sustained, should support continued improvements in its overall credit profile.”
In development activity for the group, a new Kmart Store opened in Westfield Carindale and Harvey Norman opened at Westfield Hornsby.
The next big projects for the group are a new format Myers for Westfield Belconnen and an entertainment and dining precinct at Westfield Doncaster both expected to open in November.